The N Files: CF Shutters Woodward -- A Cause for Concern

CF Industries reported today that its Woodward, Oklahoma nitrogen facility has been completely shutdown due to a problem with a boiler. The Woodward complex has an average annual production capacity for 480,000 tons of gross ammonia, 820,000 tons of UAN, and 25,000 tons of urea liquor. CF says it will take up to eight weeks to make the repairs and complete turnaround maintenance that had originally been scheduled for June, during the shutter.

This is not what we need right now. Rail and pipelines have left some growers and suppliers hanging this year and the added crimp on domestic production will mean more import cargoes either through the Gulf Coast or from Canada. Neither of these even seems plausible at present and despite a recent change in rail transport rules and regs, fertilizer may be slow to arrive, especially now, with diminished springtime N production capacity.

Urea -- This week, urea added $3.24 after adding just a pocketful of change last week. Import cargoes are still moving at a good clip and demand for nitrogen -- really, fertilizer in general -- is outrunning the rail industry's ability to place product in a timely fashion.

So far, we have noted little price response, however, as crop progress moves northward, fertilizer shipments will have to follow. If transport delays for urea to northern parts of the Cornbelt create shortages, spot demand could inflate prices significantly.

We are 80% filled for spring/summer urea and will fill the remaining 20% on a clear 'buy' signal, possibly later this week.

UAN solutions -- This week, 32% firmed $1.38 by the ton while 28% added $1.35. The national supply was strong enough to hold prices in place last week, but retailers are hesitant to overextend UAN inventories as anhydrous movement has been very strong.

Transport delays will likely have less impact on UAN for late season application and by the time growers are ready to sidedress, we expect to see UAN supplies in place at dealers. The East-Central Cornbelt has had a fair amount of rain in the last few weeks, but a lot of anhydrous is rolling and at this pace will limit UAN applications to intentional UAN users.

We are 80% filled here for spring/summer UAN. We will fill the remaining 20% when a clear signal to pull the trigger arrives. But the shutter of CF's Oklahoma plant gives us cause for concern -- stay tuned.

Anhydrous -- NH3 added $10.91 per ton on the week to $702.41. As with urea, we see the potential for transport delays to create spot shortages up north. This is where southern growers have an advantage. If there is limited supply, or the supply chain cannot make deliveries, southern growers will get dibs on stocks on hand. The disadvantage to the northern grower is that it can take several weeks after fieldwork has started in Mississippi before the North Dakota soil thaws enough to be worked.

A whole lot can happen in that time in a year like this. We note this week that Kansas and Nebraska both edged back up above the $600/ton mark and Michigan NH3 is currently priced at $830.00/ton.

We filled the last of our anhydrous a while ago and are currently 100% filled for spring and summer. If you are not currently filled for spring, get current to 100% of spring/summer anhydrous at today's price.

The Margins -- Anhydrous is still underpriced compared to the rest of the nitrogen segment. NH3 shorts urea 13 cents by the pound of N; solutions are 8 1/2 and 6 3/4 cents ahead of NH3 on price.

Urea $19.48 less than the same time last year -- up $3.24/st this week to $549.36.

UAN28% $37.95 below year-ago -- up $1.35/st this week at $361.59.

UAN32% $59.66 below last year -- up $1.38/st this week to $385.78.

N by the pound -- Anhydrous is 1 full cent higher at 42 1/2 cents/lbN; Urea is up 1/2 cent by the pound at 60 1/2 cents; UAN28% is up just a quarter cent to 63 cents per pound and UAN32% is unchanged at 59 1/4 cents/lbN.

The following is an updated table of nitrogen pricing by state by the pound of N.

Nitrogen pricing by pound of N -- 4/22/14

Anhydrous $N/lb

Urea $N/lb

UAN28 $N/lb

UAN32 $N/lb

Iowa

$0.40

$0.61

$0.64

$0.59

Illinois

$0.43

$0.59

$0.61

$0.61

Indiana

$0.45

$0.61

$0.66

$0.64

Wisconsin

$0.41

$0.54

$0.61

$0.58

Minnesota

$0.40

$0.59

$0.57

$0.59

South Dakota

$0.43

$0.64

$0.68

$0.58

North Dakota

$0.43

$0.63

$0.70

Not reported

Nebraska

$0.37

$0.60

$0.55

$0.58

Missouri

$0.43

$0.60

$0.68

$0.59

Kansas

$0.38

$0.59

$0.59

$0.58

Ohio

$0.47

$0.61

$0.66

Not reported

Michigan

$0.50

$0.62

$0.63

$0.59

Average

$0.42 1/2

$0.60 1/2

$0.63

$0.59 1/4

Year-ago

$0.54

$0.63

$0.70

$0.67

Corn --

December 2014 corn opened today at $4.90 -- 13 cents below the previous N Files. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $702.41, the ZCZ14/NH3 spread narrows 31.71 points on the week to stand at -41.59. A negative number here indicates one short ton of anhydrous is priced below expected new-crop revenue per acre based on December '14 corn futures.

Wholesale --

MosaicCo. reports wholesale urea moved higher out of the Black Sea, sideways at the Middle East and lower both at NOLA and in the Cornbelt. Tampa Ammonia remains steady on the week at $580.00, but that price is till $17.00 below year-ago.